* Euro climbs versus dollar, yen as equities advance
* Moody's downgrade of Greece slows euro climb slightly
* Euro's downtrend remains intact on structural concerns
* Risk appetite rises; Australian dollar hits 1-month high
(Adds quotes, details, updates prices, changes byline)
By Steven C. Johnson
NEW YORK, June 14 (Reuters) - The euro rose on Monday as
economic data eased concern about Europe's recovery and sparked
traders to buy higher-risk assets such as stocks and to reduce
bets against the euro zone's single currency.
Europe's problems did not recede from view entirely. After
coming within a breath of $1.23, its highest level since early
June, the euro pared gains after Moody's cut Greece's credit
rating to junk status and said the country faced substantial
risks. For more see [].
But analysts said most investors had anticipated the move,
which allowed them to focus instead on stronger-than-expected
euro zone industrial data and extend a bout of short-covering
that has added some four cents to the euro since it hit $1.1876
last week, its lowest since 2006. []
"We've been trading with this for a long time and just the
facts that the agencies finally recognize reality doesn't have
too much impact," said Sebastien Galy, senior strategist at BNP
Paribas in New York. "Asset managers are fairly smart people
and anticipated this, as did pension funds, a long time ago."
Westpac currency strategist Richard Franulovich in New York
said some traders used the downgrade as an excuse to take their
foot off the gas when it comes to buying euros but added the
currency's rise "still has some legs and I see it rising to
$1.24-$1.25."
The euro rose 1 percent at $1.2234 <EUR=>, off a session
peak of $1.2298. European stocks <> closed at a one-month
high and U.S. stocks rose <.SPX> following rises in Asia.
TECHNICAL BARRIER BROKEN
The euro and stocks had been struggling lately on fears
that debt crises in several European countries would imperil
the banking sector and slow growth in the 16-country euro zone
to a crawl.
But its gains Monday pushed it past important technical
resistance for the first time since April 9, traders said,
while hedge funds were seen cutting short euro positions around
$1.2150 in Asia and $1.2220 in Europe.
The euro also rose 1.1 percent to 112.22 yen <EURJPY=> and
the dollar added 0.1 percent to 91.73 yen <JPY=>.
BNP's Galy said investors have recovered a taste for risk
and higher-yielding investments and were cheered by successful
debt auctions in Italy, Spain and Portugal last week.
The high-yield Australian dollar rose 1.1 percent to
$0.8600, after touching a high of US$0.8668 <AUD=D4>, its best
showing against the U.S. currency in nearly a month.
Sterling hit a one-month high against the dollar after the
UK's newly created Office for Budget Responsibility said it
expected government borrowing to fall slightly faster than
originally thought. [] The pound was last up 1.5
percent at $1.4747 <GBP=D4>.
NOT OUT OF THE WOODS YET
Some analysts cautioned that the euro's downtrend remained
intact as concerns about the banking sector and debt problems
in the euro zone are likely to persist for some time.
Commodity Futures Trading Commission data showed
speculators boosted their bets against the euro in the week to
June 8 although net short positions were below record levels.
[]
"We have seen this kind of (bounce) happen before, only to
be surprised once again to the downside," said Sacha Tihanyi,
currency strategist at Scotia Capital in Toronto.
Despite Monday's gains, the euro is still down almost 15
percent against the dollar this year.
(Additional reporting by Wanfeng Zhou and Gertrude
Chavez-Dreyfuss; Editing by James Dalgleish)
